Bank of Mum and Dad props up housing market to the tune of £1.3bn, as first-time buyers struggle to get onto ladder

The Bank of Mum and Dad has pumped £1.3 billion into the UK housing market over the last five years to help get their children onto housing ladder.

During a financial crisis which has seen lenders demanding larger deposits before approving a mortgage, some 228,000 people since 2008 have turned to their parents for the lump sum they need to buy their first home, it is claimed.

One in three first-time buyers have needed help with a typical contribution on 20 per cent of their deposit.

Tough times: First-time buyers are finding it difficult to get on the housing ladder without help from their parents.

And research from The Equity Release
Council has calculated that this assistance equates to £23million
injected into the property market each month since 2008, or £1.3 billion
between January 2008 and September 2012.

And Andrea Rozario, director general of the Equity Release Council, said that some parents delay giving up work, use their retirement savings, or even remortgage their own homes to raise the capital for their kids.

She said: 'Not only can this decision cause ill
feelings among family members but it may have a detrimental impact on
the parent’s standard of living.

'With the average first time buyer
putting down a deposit of £27,000 to buy their home, it is unsurprising
that people are looking to their parents for help.

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'However, while the
vast majority of parents (and grandparents) are likely to want to help,
it is not always financially viable – especially if you have more than
one child.'

The research found that just under a third of first-time buyers over the last five years have received help from parents or grandparents, who contributed on average 20 per cent towards their deposit.

Big outlay: Parents have pumped around £1.3 billion into the housing market over the past five years as they help their children to buy their first home.

But this kind of assistance does not always a happy family make, with 54 per cent of the first-time buyers surveyed who received help from parents said that it had a negative impact on the family, with the most common issue being that one child received more help than a sibling.

And buyers can also find that the bank of mum and dad sometimes operates in the same way as any lender.

Research from HSBC published earlier this year found that roughly half of parents who help their children onto the housing ladder expect the money to be paid back.

What's more, 73 per cent of those who expect money back do so expecting interest, with the most common rate expected ranging between 2.1 and 2.5 per cent.